Thousands of protesters in Istanbul have celebrated a victory as police withdrew from Taksim square.Source: AAP

THOUSANDS of protesters in Istanbul celebrated a victory as police withdrew from Taksim square, in one of the largest demonstrations against Turkey's Islamist-rooted government.

"Government, resign!" protesters shouted as riot police pulled back from the city's central square, the epicentre of the demonstrations that have left dozens injured and earned Turkey a rare rebuke from its Western allies.

What began as an outcry against a local development project has snowballed into widespread anger against what critics say is the government's increasingly conservative and authoritarian agenda.

The unrest has spread to other cities across the country, with police blocking a group of demonstrators from marching to parliament and the prime minister's office in Ankara.

Erdogan has called for an immediate end to the violent protests and admitted there may have been some cases of "extreme" police action.

"I call on the protesters to stop their demonstrations immediately," Erdogan said in a speech, as clashes raged for a second day at Taksim square, a popular tourist destination and traditional rallying site in Istanbul.

"It is true that there have been some mistakes, extremism in police response," Erdogan added, and the interior ministry said legal action would be taken against police officers acting "disproportionately."

The Turkish premier however remained defiant, vowing to push forward with controversial plans to redevelop the iconic Taksim square - the issue that had sparked the protests.

"But our fight is not over either," said 19-year-old law student Batuhan Kantas, sitting exhausted on the ground in the square.

"We are still ruled by a prime minister who thinks people are lambs and declares himself the sultan."

Authorities said a dozen people were being treated in hospitals, but Amnesty International said more than 100 protesters were reportedly injured in clashes.

"We have become one fist," 33-year-old Ataman Bet said as he swept up shattered glass outside his small coffee shop near Taksim.

He noted that the protesters came from across the political spectrum, and even included some Erdogan supporters.

"People are angry, I am so proud of them," he said, calling the damage to his shop a "necessary sacrifice".

Clashes raged during the night, with thousands of people marching through the city, some banging pots and pans as residents shouted support from the windows.

Others held up cans of beer in defiance of the recent alcohol law by ruling Justice and Development Party (AKP) that would bring severe restrictions to the sale and advertising of alcohol, which was seen by critics as the latest sign of creeping conservatism.

"They want to turn this country into an Islamist state, they want to impose their vision all the while pretending to respect democracy," said one protester in Istanbul, declining to give her name.

Erdogan's populist government is regularly accused of trying to make the predominantly Muslim but staunchly secular country more conservative.

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